Proper level of protein tyrosine phosphorylation, coordinated by the reversible and dynamic action of protein tyrosine kinases (PTKs) and protein tyrosine phosphatases (PTPs), is essential for cell growth and survival. Aberrant protein tyrosine phosphorylation, due to perturbed balance between the activities of PTKs and PTPs, is linked to the etiology of numerous human diseases, including cancer. Consequently, signaling events driven by dysregulated protein tyrosine phosphorylation offer a rich source of molecular targets for therapeutic interventions. The therapeutic potential for such a targeted approach has been well established by the more than two-dozen PTK inhibitors that are already used in the clinic. However, acquired resistance to PTK inhibitors limit durable responses. Therefore, new targets and innovative strategies are desperately needed for more effective therapy. Given the reversible nature of protein tyrosine phosphorylation, there is enormous potential to modulate disease progression at the level of PTPs. To this end, the Src homology 2 (SH2) domain containing protein tyrosine phosphatase-2 (SHP2), encoded by the Ptpn11 gene, has been established as a positive signal transducer, required for receptor PTK-mediated Ras activation. In addition, considerable evidence indicates that SHP2 is a bona fide oncoprotein. Activating SHP2 mutations are found in leukemia and solid tumors. Moreover, given the obligatory requirement of SHP2 in growth factor-mediated pathways, thwarting SHP2 activity may also prove effective for cancers caused by abnormal activation of receptor PTKs, some of which respond poorly to kinase inhibitor monotherapy. Indeed, recent studies indicate that SHP2 is a central node in intrinsic and acquired resistance to tyrosine kinase targeted cancer drugs. We hypothesize that potent and selective small molecule SHP2 inhibitors can serve as novel anti-cancer agents. Although PTP- based drug discovery has been a challenge in the field, due to difficulty in developing potent, selective and bioavailable small molecule inhibitors, we have identified a novel hit compound 11a-1 that inhibits SHP2 with an IC50 of 200 nM and over 5-fold selectivity against a large panel of PTPs. Moreover, this inhibitor efficaciously blocks growth factor stimulated Erk1/2 and Akt activation, cell proliferation, and tumor growth in a number of in vitro and in vivo systems. The overall goal of this proposal is to employ a multifaceted and integrated approach to optimize the existing hit 11a-1 into preclinical leads to assess the therapeutic potential of targeting SHP2 for cancer treatment. Successful completion of this project will create a solid foundation upon which novel SHP2-based targeted anti-cancer therapy can be developed. Moreover, success of this project will also galvanize the development of therapeutics targeting other members of the PTP family, ultimately impacting broadly on human health.